Looking beneath the surface

December 17, 2008

Boyd 2008 - My Overall Conclusions

So what in summary did I take away from this amazing weekend?

That there is no soft landing. We are not in a recession. We are not even in a depression. We are at the end of an era. The Tipping Point is of course the financial collapse. The Vast Ponzi Scheme of our financial world - with the vast sums in the Derivative Market and the Credit Bubble all in effect lost - cannot be saved. There is not enough money in the national accounts to pull this back.

The search for efficiency and the urge to consume has set us all up like a row of dominoes - there is no buffer, no resiliency. As one problem rises it causes another. As one solution is tried it drives another problem. We all pull back and the consumer economy stalls. The auto industry and credit firms feeds the media (40% of conventional advertising). Papers and TV and Radio networks, many subject to LBO's will have to fail as per the Tribune. Every sector will be laying people off. Sales of all things fall off a cliff - driving more business failures and layoffs. Cities and states that depend on sales tax and property tax and the credit markets can rely on none of these. So they too will have to lay off millions - thus making all the problems worse. National governments will be asked to save us all and of course cannot. As States and Cities get squeezed and cannot borrow, they will too lay off millions - teachers, firemen police. No one will be safe

As all of this is happening - the web is also sweeping through all businesses and gutting all who made artificial scarcity the heart of their model. This would be enough to drive a revolution but now is only one aspect of a perfect storm. There is no time to feel a way into a new model. A new model has to be found in 2009 or your business will die from this alone.

The world food system is exceptionally connected and tightly coupled. High fertilizer prices in 2008 will drive a food shortage in 2009. Inventories of grain are already low. The collapse of commerce and credit may risk food supplies in 2009. The 2008 rice problem was a harbinger for what is to come

Gangs in Mexico, pirates in the Gulf, the Taliban in Afghanistan, terror in India - Nation states are helpless in spite of spending trillions - who knows what may happen in 2009/10?

Energy - with oil prices collapsing - so will our will to replace oil - the set up for Peak Oil will be perfect. The risk is that we will repeat what we did in the 1980's and "forget". Or world events could intervene. Pirates closing the Straits of Hormuz may wake us up. Imagine no oil on the East Coast for 3 months! It could happen tomorrow. What would happen to oil and food then? What fall back do you have for that?

Weather - anyone's guess for 2009 - but what we can be sure of is that something big somewhere

Coupling - the issue is that with everything so fragile - even broken - that problems that we could have stood up too become major or even overwhelming.

The problem is our mindset - the Newtonian Machine view of reality. It has outlived its value and become its dark side. We have given up all our power to it and those who control it could not help themselves from looting it

The solution is a new Mindset - the OO in OODA - that of an interconnected world with organizations and a leadership model that fits this new reality

That such a replacement is emerging as we saw by looking at KETC and the PEI Bio Alliance - there must be many other examples out there too such as the Transition Towns Project

That the DNA of how these organizations work is also emerging - Stuart Baker's work, Dee Hock's Chaords. The wisdom required to run such organizations is also ancient - The Art of War

The goal for us all to work to is clear - that we have to build back into the system Resiliency. This means that each region has to work to become largely energy, food and financially self sustaining and that each region needs to network into the others. In effect we shift from an efficient machine to a resilient network

That the leadership model is no longer the dominant hero but the ego-less servant

That we cannot wait to be saved. We have to all do our part to make our place "Home"

Many are desperate that somehow President Obama save us and importantly turn the clock back. Take us back to consumer heaven of 2006. Even if he could, would this be the right thing to do? To take us back to a world that is a fantasy?

What got us to this place?

The Dark Side of a Mindset. The Machine/Institutional/Newtonian/Engineering Mindset that created most of the wealth of the 19th and 20th century tipped over into the dark side. Where not only did we give up all our power to institutions but gave the few that ran them the license to use these institutions for their own benefit.

So we spend nearly a trillion on defense but not on what the troops really need. We spend billions of health and America is on a par with Cuba. We spend billions on education and more than 50% of Americans are functionally illiterate. We spend billions on food and we eat crap. We see that the leadership of these institutions live in a bubble. The gap between the rich and poor has never been greater. The middle class is being squeezed. We don't make anything anymore. We make no progress toward energy independence.

Nearly every citizen now lives in dread. Will I keep my house, my job, my pension? Do you feel safe? Everything that people have worked for and hoped for now is at risk.

At the heart of the problem - the OO in OODA is the Mindset. The problem is how we all "saw" the world/reality. We gave up all that was important to us to faceless bureaucrats. Our energy, our food, our health, our education, our security and our wealth. We ended up like peasants in the middle ages who gave up their soul and their chance of salvation to the Bureaucrats who ran the church - who made a business - indulgences - out of our naive faith in their ability to act on our behalf

So what can we do? This was a huge focus of the conference.

We have to shift the Mindset and hence the design of our world from Efficient Machine to Resilient Organism. We have to shift the mindset of the leader from the hero/Saviour to the servant leader.

Above all, each place has to be largely self sufficient in:

Food

Energy

Money/Stored wealth/Credit/Savings

Security

As we talked about the PEI Bio Alliance and KETC in St Louis, we could see how to organize how to do this - how to convene the power of the full community to do this great work. Stuart Baker and Jim Gimian and Barry Boyce went deeper and showed how to cope well with the conflict that is natural when trying to do such complex work.

Our bottom line was this. There is no return to 2006. There will be a terrible period of breakdown that has only just begun. Merely waiting to be saved or getting angry and blaming is a waste of energy.

We know what to do.

For instance on PEI, last year we spent $600 on energy. That is about the same as PEI's income tax revenue and more than PEI gets from the Feds. $200 million of that was on heating. All but the tanker drivers salaries left PEI of the $200 million. We could save all of that in 5 years. All we have to do is to agree that this is what we will do and to develop a plan. What about your area - same kind of math I bet. Set up an "Alliance" structure to do this

Add a local energy strategy to this as well as we make the savings in heating

On PEI we have 2 days of food in inventory. All depends on the just in time trucking system. We have no food security. What is yours like? All we have to do is to acknowledge this. Then create a plan. What might such a plan contain? Building a local market and distribution plan would be my first place. Connect local food to our schools and institutions such as hospitals. In-cent the local. Connect this Alliance Structure to the others.

Build on what some of our cities are doing such as Stratford in becoming self reliant cities - connect them to each other and connect them to the larger Transition Towns movement - set up an Alliance for them.

Explore with the Credit Unions how we can better mobilize the savings of PEI and keep the money here.

Research all of this and share the results with others

Make Self Reliance the mantra of PEI.

So the Boyd Conference was both depressing and exhilarating. It seemed clear that there was no way back but that the way forward could be wonderful - if we chose it!

Comments

Boyd 2008 - My Overall Conclusions

So what in summary did I take away from this amazing weekend?

That there is no soft landing. We are not in a recession. We are not even in a depression. We are at the end of an era. The Tipping Point is of course the financial collapse. The Vast Ponzi Scheme of our financial world - with the vast sums in the Derivative Market and the Credit Bubble all in effect lost - cannot be saved. There is not enough money in the national accounts to pull this back.

The search for efficiency and the urge to consume has set us all up like a row of dominoes - there is no buffer, no resiliency. As one problem rises it causes another. As one solution is tried it drives another problem. We all pull back and the consumer economy stalls. The auto industry and credit firms feeds the media (40% of conventional advertising). Papers and TV and Radio networks, many subject to LBO's will have to fail as per the Tribune. Every sector will be laying people off. Sales of all things fall off a cliff - driving more business failures and layoffs. Cities and states that depend on sales tax and property tax and the credit markets can rely on none of these. So they too will have to lay off millions - thus making all the problems worse. National governments will be asked to save us all and of course cannot. As States and Cities get squeezed and cannot borrow, they will too lay off millions - teachers, firemen police. No one will be safe

As all of this is happening - the web is also sweeping through all businesses and gutting all who made artificial scarcity the heart of their model. This would be enough to drive a revolution but now is only one aspect of a perfect storm. There is no time to feel a way into a new model. A new model has to be found in 2009 or your business will die from this alone.

The world food system is exceptionally connected and tightly coupled. High fertilizer prices in 2008 will drive a food shortage in 2009. Inventories of grain are already low. The collapse of commerce and credit may risk food supplies in 2009. The 2008 rice problem was a harbinger for what is to come

Gangs in Mexico, pirates in the Gulf, the Taliban in Afghanistan, terror in India - Nation states are helpless in spite of spending trillions - who knows what may happen in 2009/10?

Energy - with oil prices collapsing - so will our will to replace oil - the set up for Peak Oil will be perfect. The risk is that we will repeat what we did in the 1980's and "forget". Or world events could intervene. Pirates closing the Straits of Hormuz may wake us up. Imagine no oil on the East Coast for 3 months! It could happen tomorrow. What would happen to oil and food then? What fall back do you have for that?

Weather - anyone's guess for 2009 - but what we can be sure of is that something big somewhere

Coupling - the issue is that with everything so fragile - even broken - that problems that we could have stood up too become major or even overwhelming.

The problem is our mindset - the Newtonian Machine view of reality. It has outlived its value and become its dark side. We have given up all our power to it and those who control it could not help themselves from looting it

The solution is a new Mindset - the OO in OODA - that of an interconnected world with organizations and a leadership model that fits this new reality

That such a replacement is emerging as we saw by looking at KETC and the PEI Bio Alliance - there must be many other examples out there too such as the Transition Towns Project

That the DNA of how these organizations work is also emerging - Stuart Baker's work, Dee Hock's Chaords. The wisdom required to run such organizations is also ancient - The Art of War

The goal for us all to work to is clear - that we have to build back into the system Resiliency. This means that each region has to work to become largely energy, food and financially self sustaining and that each region needs to network into the others. In effect we shift from an efficient machine to a resilient network

That the leadership model is no longer the dominant hero but the ego-less servant

That we cannot wait to be saved. We have to all do our part to make our place "Home"

Many are desperate that somehow President Obama save us and importantly turn the clock back. Take us back to consumer heaven of 2006. Even if he could, would this be the right thing to do? To take us back to a world that is a fantasy?

What got us to this place?

The Dark Side of a Mindset. The Machine/Institutional/Newtonian/Engineering Mindset that created most of the wealth of the 19th and 20th century tipped over into the dark side. Where not only did we give up all our power to institutions but gave the few that ran them the license to use these institutions for their own benefit.

So we spend nearly a trillion on defense but not on what the troops really need. We spend billions of health and America is on a par with Cuba. We spend billions on education and more than 50% of Americans are functionally illiterate. We spend billions on food and we eat crap. We see that the leadership of these institutions live in a bubble. The gap between the rich and poor has never been greater. The middle class is being squeezed. We don't make anything anymore. We make no progress toward energy independence.

Nearly every citizen now lives in dread. Will I keep my house, my job, my pension? Do you feel safe? Everything that people have worked for and hoped for now is at risk.

At the heart of the problem - the OO in OODA is the Mindset. The problem is how we all "saw" the world/reality. We gave up all that was important to us to faceless bureaucrats. Our energy, our food, our health, our education, our security and our wealth. We ended up like peasants in the middle ages who gave up their soul and their chance of salvation to the Bureaucrats who ran the church - who made a business - indulgences - out of our naive faith in their ability to act on our behalf

So what can we do? This was a huge focus of the conference.

We have to shift the Mindset and hence the design of our world from Efficient Machine to Resilient Organism. We have to shift the mindset of the leader from the hero/Saviour to the servant leader.

Above all, each place has to be largely self sufficient in:

Food

Energy

Money/Stored wealth/Credit/Savings

Security

As we talked about the PEI Bio Alliance and KETC in St Louis, we could see how to organize how to do this - how to convene the power of the full community to do this great work. Stuart Baker and Jim Gimian and Barry Boyce went deeper and showed how to cope well with the conflict that is natural when trying to do such complex work.

Our bottom line was this. There is no return to 2006. There will be a terrible period of breakdown that has only just begun. Merely waiting to be saved or getting angry and blaming is a waste of energy.

We know what to do.

For instance on PEI, last year we spent $600 on energy. That is about the same as PEI's income tax revenue and more than PEI gets from the Feds. $200 million of that was on heating. All but the tanker drivers salaries left PEI of the $200 million. We could save all of that in 5 years. All we have to do is to agree that this is what we will do and to develop a plan. What about your area - same kind of math I bet. Set up an "Alliance" structure to do this

Add a local energy strategy to this as well as we make the savings in heating

On PEI we have 2 days of food in inventory. All depends on the just in time trucking system. We have no food security. What is yours like? All we have to do is to acknowledge this. Then create a plan. What might such a plan contain? Building a local market and distribution plan would be my first place. Connect local food to our schools and institutions such as hospitals. In-cent the local. Connect this Alliance Structure to the others.

Build on what some of our cities are doing such as Stratford in becoming self reliant cities - connect them to each other and connect them to the larger Transition Towns movement - set up an Alliance for them.

Explore with the Credit Unions how we can better mobilize the savings of PEI and keep the money here.

Research all of this and share the results with others

Make Self Reliance the mantra of PEI.

So the Boyd Conference was both depressing and exhilarating. It seemed clear that there was no way back but that the way forward could be wonderful - if we chose it!